Orica CEO on below 2 degree warming: “it doesn’t seem that the world is heading that way”

15 December 2017

The Annual General Meeting of Orica, one of the world’s largest providers of commercial explosives and blasting systems for mining, was held this morning in Melbourne. The ASX50 company, which is heavily reliant on the coal, oil and gas industries, revealed to shareholders today that climate risk is not considered a material business risk.

In response to a shareholder’s query to the KPMG auditor about why climate change is not a material risk, CEO Mr Alberto Calderon said, “we’re concerned about global warming but not in terms of affecting us directly”. Orica’s business in mining, chemical production and distribution services is emissions intensive and exposed to volatility in the global energy market.

Calderon’s ‘Energy and Climate’ comment in Orica’s latest Sustainability Report, which was made public yesterday, states that “coal will remain the largest single source of electricity generation through to 2040”.

This CEO’s projection of coal demand for electricity generation is based on the “New Policies Scenario” from the International Energy Agency’s World Energy Outlook. This scenario leads the world beyond 2 degrees of global warming. The IEA’s 450 Scenario, which assumes the world’s commitment to the Paris Agreement will be upheld, limiting warming below two degrees, predicts coal will have only a 7% share of energy mix in 2040. When a shareholder asked which scenario the CEO had taken into consideration, Calderon commented on the 450 scenario: “it doesn’t seem that the world is heading that way”. It appears Orica’s business model is based on forecasts that are consistent with beyond 2 degrees of warming:

Orica is also a member of the World Coal Association (WCA), a global network working to promote coal. Orica’s WCA membership and failure to comply with reporting recommendations made by the Task Force on Climate Related Disclosures (TCFD) contradicts Orica’s claims of sustainable practices.

Licence Breaches Galore

Orica has regularly breached pollution licenses and been the subject of grievances from local communities in their areas of operation. Nature Conservation Council of NSW reports that Orica breached its pollution license 131 times from 2000 to 2011 with unlawful releases of arsenic and elevated levels of nitrogen oxides and ammonia.

The Queensland Court in 2012 ordered Orica to pay $432,000 after the company pleaded guilty to releasing cyanide-contaminated effluent on 217 occasions between March and May 2011. The Orica Yarwun facility also encountered cyanide incident and ammonia leak on two separate days in September 2016.

In 2014, Orica was convicted and ordered to pay the largest penalty ever issued by the Land and Environment Court prosecutions- $768,250 for pollution incidents at its Kooragang and Botany plants. This includes a fine of $211,750 for the controversial discharge of potentially carcinogenic chemical into Stockton residential area three years prior.

A $67-million shutdown and overhaul of Orica’s Kooragang plant was finally announced in February 2017, but this wasn’t the end of the horrors. Dozens of workers were exposed to potentially deadly asbestos fibres found unregistered at the site.

Fueling Destruction of Aboriginal Rock Art

At the AGM today, Mr Calderon announced that Orica’s $800 million Burrup explosives plant in Western Australia had won a new contract with BHP to supply ammonium nitrate from December 2019. This plant is less than a kilometre from the closest rock art petroglyphs at the Burrup Peninsula which has more than one million rock art engravings, some dating back more than 30,000 years.